HOME Program Breaking News NCSHA HFA Institute January 12, 2015

FY 2015 HOME Budget Picture HOME FY 2015 Appropriation: $900 Million 47% Decrease since FY 2010 Administration budget proposed eliminating continuous grandfathering/reduce # of local PJs Local PJs receiving less than $500K in 3 years of 5-year Con Plan cycle would lose PJ status If appropriation increased, PJs receiving allocations >$500K would re-enter program 2

HOME Rulemaking HOME Rule published July 24, 2013 – Most provisions apply prospectively to projects committed after 8/23/13 – Provisions w/delayed effective dates now effective Separate CHDO expenditure deadline Property Standards, Inspections, Utility Allowances – were to go into effect 1/24/15 – stay tuned for additional information – Technical Corrections due to be published late this month 3

New/Revised CPD Notices – CHDO Qualifications and Roles – Project Underwriting and Subsidy Layering – Homebuyer Policies and Underwriting – Match – updated for new rule – Cost Allocation – Deadline Compliance – updated for new rule – Requirements for Committing Funds Applicability Charts Upcoming HOME Guidance Slide 4

FIFO Change First-In-First-Out Disbursements – For FY15 & subsequent grants, IDIS will no longer function FIFO. FY 14 and prior grants will continue FIFO – PJ will commit HOME funds from a specific year’s grant to a project. When the PJ draws funds for that project, the funds specifically committed to those projects will be disbursed through IDIS. – Guidance on new IDIS functionality coming soon. 5

HOME Commitment Change GAO issued opinion that HUD’s current “cumulative method” violates Sec 218(g) of NAHA, which establishes 24-month commitment requirement. – HUD is required to implement commitment and CHDO reservation requirements on a grant- specific basis HUD drafting proposed rule to implement grant-specific method 6

HOME Commitments GAO Decision: HUD must change method of determining compliance with commitment deadlines from “cumulative method” to “grant-specific method” – PJs required to commit funds from each specific grant within 24 months – 15% of each grant must be used for CHDO set-aside project (no more cumulative average) HOME funds that become uncommitted after 24 month deadline cannot be recommitted – Cancelled projects – Projects completed below budget Change to treatment of program income required 7

HOME Commitments HUD anticipates significant increase in deobligations for: – Failure to commit timely – Funds becoming uncommitted after deadline HUD is seeking a legislative fix that would establish cumulative method/CHDO cumulative average in statute – New methodology may apply as early as FY 15 grants with deadlines occurring in 2017 Proposed and final rulemaking required 8

Additional HOME Rulemaking Conforming changes to HOME rule will be made through upcoming regulations issued for: – New Violence Against Women Act (VAWA) provisions – 2 CFR Part 200 Changes HUD expects to draft another proposed rule for HOME to include: – HERA exception to HOME rents for units occupied by HCV holders – Alternative to 221(d)(3) limits – Tweaks to July 2013 rule provisions 9

CHDO Workshops (for CHDOs and PJs) – 25 Workshops Spring 2014 – Fall 2014 – HUD provided travel scholarships to more than 200 CHDOs Updated Building HOME deliveries have begun – 25 Workshops Fall 2014 – Spring 2015 – Building HOME is going online HOME Regulations Cert and Admin Cert courses: 2015 Project Underwriting & Subsidy Layering: 2015 Underwriting Homebuyers: Winter 2015 HOME TA & Training Slide 10

For information on HOME training, policy guidance, TA products, visit Sign up for HOME listserv Where to Find It Slide 11

FINANCIAL & INFORMATION SERVICES DIVISION UPDATE

HOME Accomplishments Over history of the HOME program (through December 1, 2014): – 1,189,846 HOME units completed 465,077 rental units (39.1%) 493,842 homebuyer units (41.5%) 230,927 homeowner rehab units (19.4%) – 296,084 households received TBRA – Historical average HOME cost/unit = $23,470 – Historical average TBRA/household = $3,185 – Historical leveraging 4.17 : 1 13

FY 2014 HOME PJs / Funding 640 Participating Jurisdictions – 52 states (including DC and Puerto Rico) – 584 local PJs (including 142 consortia) – 4 Insular Areas FY 2014 Funding level $1 billion – Added $12.7 million in prior year recaptured funds 14

HOME FY 2014 Accomplishments 15 39,825 HOME units completed 20,540 rental units (51.6%) 12,854 homebuyer units (32.3%) 6,431 homeowner rehab units (16.1%) 11,744 households assisted with TBRA

Cumulative / FY 2014 Tenure Type 16

HOME Four-Year Accomplishments 17 FY 2011FY 2012FY 2013FY 2014 Rental Units39,16228,77920,92920,540 Homebuyer Units21,59320,12915,35012,854 Homeowner rehab Units9,1379,01710,5476,431 Total units Completed69,89257,92546,82639,825 TBRA Households Assisted15,68315,92912,36311,744

FY Accomplishments 18

FY Appropriations 19

Changes for FY 2015 FIFO (first-in, first-out) accounting – Commits and disburses oldest available funds first by fund type and recipient – For HOME grants Grant-based accounting – Commits funds from a specific grant and disburses the same funds – For grants 20

Report Changes Deadline Compliance Status Report – 2015 deadlines: Commitment requirement for grants through 2013 – Includes new CHDO commitment requirement Disbursement requirement for grants through 2010 – Includes new CHDO disbursement requirement – Cumulative requirements – CHDO reservation requirement removed – New CPD Notice issued shortly 21

Report Changes IDIS PR27 Report – Change in commitment and CHDO commitment requirement – Additional fund types not yet available to PJs IDIS PR49 Report – Changed for 2015 deadlines: Includes new CHDO commitment requirement Includes new CHDO disbursement requirement CHDO reservation requirement removed – Cumulative requirements 22

TCAP Accomplishments $2.25 billion+ expended 62,305 TCAP units reported completed 60,494 units reported occupied 1,811 units reported vacant 9 activities remain open in IDIS – ARKANSAS DEVELOPMENT FINANCE AUTHORITY (1) – DISTRICT OF COLUMBIA DEPARTMENT OF HOUSING AND COMMUNITY DEVELOPMENT (3) – LOUISIANA HOUSING FINANCE AGENCY (1) – MINNESOTA HOUSING FINANCE AGENCY (4) 23

TCAP Closeout All Financial Closeouts completed Grant Closeout Procedures forthcoming All TCAP activities must be marked completed in IDIS All TCAP units must be marked occupied in IDIS with applicable beneficiary characteristics entered in the system 24

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Housing Trust Fund The HTF was established in the Housing and Economic Recovery Act (HERA) on July 30, 2008 Goals of the HTF: to increase and preserve the supply of decent, safe, and affordable housing for extremely low-income (ELI) and very low-income (VLI) households, with primary attention to rental housing Per HERA, GSEs (Fannie Mae and Freddie Mac) are to deposit 4.2 basis points of each dollar of unpaid principal balance of its total new business purchases during each fiscal year into the HTF. 26

Housing Trust Fund Since 2009, FHFA had suspended these deposits due to financial viability of Fannie Mae and Freddie Mac but in December 2014, FHFA terminated suspension of deposits by GSEs into HTF. GSEs are to begin deposits starting with FY 2016 (January 1, 2016) Estimates of the expected amounts of these deposits, and therefore the amount available for allocation to States, vary widely 27

HTF Overview HTF Beneficiaries are ELI ( below 30% of area median income) or VLI (below 50% of area median income) At least 80% of each annual formula allocation must be spent on rental housing Up to 10% of each annual formula allocation may be spent on homeownership Up to 10% of each annual formula allocation may be spent on administrative costs 28

HTF Rulemaking Proposed HTF formula rule published on December 4, 2009 Proposed program rule published on October 29, 2010 Combined regulations to be published shortly

HTF Formula Per proposed HTF formula rule published on December 4, 2009 Formula allocations will be made to states and insular areas based on statutorily required need based factors and the relative cost of construction in each state: 1)Shortage of standard rental units affordable and available to extremely low-income renter households in the state 2)Shortage of standard rental units affordable and available to very low-income renter households in the state 30

HTF Formula 3)The proportion of extremely low-income renter households in the state living with either incomplete kitchen or plumbing facilities, more than one person per room, or paying more than 50% of income for housing costs 4)The number of very low-income renter households in the state paying more than 50% of income on rent 5)The relative cost of construction in the state is also used as a factor that will adjust the amounts in each state’s formula allocation 31

HTF Participation Requirements HTF funds will be allocated by formula to States To administer HTF allocation, States may designate a:  State housing finance agency, a housing and community development entity;  a tribally designated housing entity (as such term is defined in section 4 of the Native American Housing Assistance and Self-Determination Act of 1997 (25 U.S.C. 4103));  or any other qualified instrumentality of the State to receive such grant amounts. 32

HTF Participation Requirements All States must submit an “HTF Allocation Plan”, which describes how HTF funds will be distributed, as part of their Consolidated Plans Public participation and input on the HTF Allocation Plan is required by law HTF Allocation Plan must be based on priority housing needs identified in the Plan HTF funds will likely be combined at local level with LIHTC; HOME; and other Federal, state, and local programs to create mixed-income communities 33

HTF Implementation HTF Regulations published very soon States will designate HTF agency AFTER regulations published Formula Allocations will likely be made in Spring 2016, based on GSE deposits to HTF made in early States will begin implementation with 2016 Consolidated Plan Program Year HTF Allocation Plans due to HUD with 2016 Consolidated Action Plans 34